The April gold contract has forged another higher high extension and reached up to the highest level since June 15th in a move this morning that would appear to have legs. It is a little surprising to see gold continue to rise in the face of bearish Indian gold demand/import news from Gold Fields Mineral Services overnight and that highlights the strength on the bull camp.
Another bearish gold story that is being ignored by the gold trade today came from Australia where Newcrest mining posted a year-over-year quarterly gold production increase of 42,000 ounces. On the other hand the GFMS report might be seen as a fresh bullish development for silver, as the consultancy group is suggesting that Indian demand is starting to shift toward silver and away from gold.
Understandably consumers are giving silver a fresh look at the expense of gold with Indian gold prices in terms of the Rupee near all-time highs while silver is being viewed as "cheaper". Clearly the bull camp has a number of bull arguments that might be expected to become even more powerful in the day ahead.
In particular, we see the Fed decision later today as a potential major bearish development for the dollar which in turn would be a significant bullish development for gold and silver prices. In our opinion, the Fed should acknowledge the vast amount of global slowing evidence, the obvious drag from the US government shutdown and the unresolved US/Chinese trade war.
It is possible that the Fed might utter some hawkish words regarding ongoing strength in the US jobs market but if that strength is found to be fading, the Dollar index could quickly fall below 95.00. A decline below 95.00 in the Dollar index could project an April gold rally up above $1,335.00.
On the other hand, the April gold contract from last week's lows has already rallied roughly $36 an ounce and the FOMC result could prompt significant price volatility. There is an old gap area that starts up at $1,337.20 in April gold and that gap will not be filled until $1,345.60, and for some that could be a near term technical objective.
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Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Financial Services LLC, unless otherwise expressly noted.
